Fresh from a rousing couple weeks of presidential nominating exhibitions, the Republican National Convention in Cleveland, quickly followed by Philadelphia’s Democratic National Convention, voters in the United States find themselves faced with some rather complex decisions. Along with who we choose to support to fill the office of President in November, domestic consumers and investors were treated to two very different accounts of the current condition of the U.S. economy.
True to form, in the wake of nearly eight years under the yoke of the opposition, the Republican nominee, Donald Trump, has painted a picture of calamity and ruin, inflicted upon us via the failed policies of President Obama and general Democratic incompetence. Hillary Clinton, meanwhile, espouses continued hope in the Democratic mission, cautioning rather, against succumbing to Republican sanctioned gloom and divisiveness. Also at the forefront, of course, are the conflicting means of moving forward.
When you sift through the rhetoric and delve into the revealing trends, figures and indicators, an economic picture comes into focus that tends to belie both political extremes. The economy is neither sinking nor surging, and it is difficult to stand behind representatives from either party who make either claim. The effect this may have as much to do with the candidate’s personalities as their policy positions.
According to Gallup, Donald Trump and Hillary Clinton are both viewed unfavorably by nearly 60% of U.S. adults. And while there is not a proven scientific correlation, in a similar study Gallup also found recently among U.S. adults, 60% feel economic conditions in the country are “getting worse.”
This does not point to overwhelming confidence in the future of the United States either politically or economically. While these Gallup polls are influenced by the irrevocably subjective human factors of emotion and personal perception, the bodies in whom we put our faith to be more calculated and clinical are reaching similar conclusions.
Where Are We at Now
James Bullard, president of the Federal Reserve Bank of St. Louis, and members of the Federal Reserve’s Open Market Committee, voted unanimously at their most recent meeting, in June, to maintain current short term interest rates at 0.25%-to-0.50%. The U.S. economy created a mere 38,000 jobs in May, and grew just 0.8 percent in the first quarter of 2016. This was down even from the 1.4-percent figure in the final quarter of 2015.
Despite the most recent rate hike in December, what many hoped was a signal that the economy was beginning to show genuine signs of growth, several members of the FMOC now say they expect we could see only one, or perhaps not a single rate hike in 2016. A delay by the Fed often reflects an abundance of caution regarding the overall global economic situation, and more specifically pervasive, even growing domestic concerns. The next President’s ability to positively impact the U.S. labor market will have a dramatic effect on the economy and thus monetary policy.
How Are the Candidates Responding to Our Economic Situation
Each candidate is making more than their share of flowery speeches. No less than can be expected in an election year. In the absence of a truly favorable economic environment, voters, consumers and investors might like to hear a substantial, well-reasoned vision regarding jobs, wages, inflation and the future. National security is a paramount concern. But what keeps the average American up at night is not ISIS, it’s keeping the lights on in their own home. If either candidate chooses to address the truly pressing domestic, economic issues, rather than leaning upon colloquial barbs and parables, it might just resonate and restore some faith in our present system.
“Very low interest rates, by driving liquidity into equities and assets in search of higher yields, are exacerbating the inequality that is disturbing American politics with distributional conflicts. Homeowners, and the 10 percent of Americans who hold 81 percent of the directly and indirectly owned stocks, are prospering. Those whose wealth comes from wages — formerly, the Democratic Party’s base — are losing ground. No wonder Hillary Clinton vows to “expand” Social Security, never mind its rickety financial architecture.” George Will, Washington Post
Neither Trump nor Clinton possess George Will’s financial acumen, nor his vocabulary. A candidate for President of the United States, however, ought to be able to communicate at least a simple domestic agenda to the interested American public.
The corresponding Gallup figures above may be mostly a coincidence, but if the voting public can find a candidate to rally behind, an economic rally may conceivable occur in its wake. We certainly grasp and then cling to our hope. We often fear, but as regularly benefit from change. And who doesn’t aspire to greatness? What the economy, constituency, and the nation need now is leadership.